Independence and Impartiality of Arbitrators: How to Challenge a Biased Arbitrator

In the second half of 2024, the Hong Kong International Arbitration Centre (HKIAC) reported a record 381 new arbitration filings, a 20% increase year-on-year. This surge, detailed in the HKIAC’s 2024 Annual Statistics, reflects Hong Kong’s growing role as a preferred seat for cross-border commercial dispute resolution. With this volume comes heightened scrutiny of arbitral tribunals. A single impartial arbitrator can derail a multi-million-dollar case, leading to enforcement challenges under the New York Convention or costly annulment proceedings. For commercial parties, HR professionals managing cross-border employment disputes, and family mediators overseeing financial settlements, the ability to identify and challenge a biased arbitrator is not a theoretical exercise—it is a procedural necessity. Hong Kong’s legal framework, rooted in the Arbitration Ordinance (Cap. 609) and reinforced by Court of First Instance decisions, provides a clear mechanism for such challenges. This article outlines the legal standards for arbitrator independence and impartiality, the procedural steps to object, and the practical risks of failing to act promptly.

The Legal Standard: Independence and Impartiality Under Cap. 609

The Arbitration Ordinance (Cap. 609) establishes the foundational duty of every arbitrator. Section 11 states that an arbitrator must be and remain independent and impartial at all times. This is not a one-off declaration at appointment; the duty is continuing. The legislation provides that a party may challenge an arbitrator only if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence (Section 25(2)(a)).

What constitutes “justifiable doubts.” The test is objective. The Court of First Instance in Pacific Crown Engineering Ltd v. Hyundai Engineering & Construction Co Ltd [2003] 3 HKLRD 440 held that the standard is whether a fair-minded and informed observer, having considered the facts, would conclude there was a real possibility of bias. This is the “real possibility” test, not a requirement to prove actual bias. Common grounds include financial interests in the dispute, prior professional relationships with a party, or public statements on the subject matter of the arbitration.

The IBA Guidelines as a reference tool. Hong Kong courts frequently refer to the IBA Guidelines on Conflicts of Interest in International Arbitration. The Guidelines divide situations into three lists: the Red List (non-waivable and waivable), the Orange List (disclosable situations that may give rise to doubts), and the Green List (no conflict). While not legally binding in Hong Kong, the Court of Appeal in Chu Kong Petrochemicals Ltd v. Lau Kwok Fai [2005] 1 HKLRD 626 cited the Guidelines as persuasive authority. Parties and arbitrators should treat them as a practical benchmark.

Disclosure obligations. An arbitrator must disclose any circumstances that may give rise to justifiable doubts as to their impartiality or independence. This is a continuing duty under Section 25(1) of Cap. 609. Failure to disclose a material relationship—for example, a recent advisory role with one party’s parent company—can itself be a ground for challenge, even if the relationship would not have disqualified the arbitrator.

Step-by-Step Procedure for Challenging an Arbitrator

The procedure for challenging an arbitrator is set out in Sections 25 to 27 of Cap. 609. The timeline is strict. Missing a deadline can waive the right to object.

Step 1: Identify the ground and gather evidence. The party must identify specific facts that create justifiable doubts. Vague allegations of “unfairness” are insufficient. Examples from HKIAC-administered cases include: an arbitrator who had previously acted as counsel for a party in a related matter; an arbitrator whose law firm was currently advising a party’s affiliate; or an arbitrator who made public comments on the merits of the dispute. Documentary evidence—emails, engagement letters, public records—should be compiled.

Step 2: Submit a written challenge to the arbitral institution. If the arbitration is administered by an institution (e.g., HKIAC, ICC, SIAC), the challenge is submitted to that institution, not directly to the court. The HKIAC Administered Arbitration Rules (2024) provide at Article 13 that a party must send a written statement of challenge to the HKIAC, the other parties, and the challenged arbitrator within 15 days of becoming aware of the grounds. The HKIAC then decides on the challenge, often after receiving submissions from all parties and the arbitrator.

Step 3: If the institution rejects the challenge, apply to the Court of First Instance. Under Section 26(2) of Cap. 609, a party may apply to the Court of First Instance to set aside a decision of the arbitral institution rejecting the challenge. This application must be made within 30 days of receiving notice of the institution’s decision. The court’s review is not a full rehearing; it assesses whether the institution’s decision was procedurally fair and within the bounds of reasonableness.

Step 4: For ad hoc arbitrations, apply directly to the court. Where the arbitration is not administered by an institution, the challenge is made directly to the Court of First Instance under Section 26(1). The same 15-day notice period applies from the date the party became aware of the grounds.

Step 5: Consider the impact on the arbitral timetable. A challenge does not automatically stay the arbitration. The arbitral tribunal, including the challenged arbitrator, may continue the proceedings unless the institution or court orders otherwise (Section 27(2)). Parties should file a challenge as early as possible to avoid wasted costs.

Court Intervention and Enforcement Risks

Hong Kong courts are generally reluctant to intervene in arbitral challenges during the proceedings. The policy of minimal curial intervention is embedded in Section 3(2) of Cap. 609. However, a failure to challenge a biased arbitrator at the right time can have severe consequences at the enforcement stage.

Setting aside the award. Under Section 81(1)(a)(iv) of Cap. 609, a party may apply to set aside an arbitral award if the composition of the arbitral tribunal was not in accordance with the parties’ agreement or the Ordinance. A successful challenge on grounds of bias falls under this provision. The application must be made within three months of the date of the award. The Court of First Instance in Hebei Import and Export Corp v. Polytek Engineering Co Ltd [1996] 3 HKC 725 confirmed that a failure to raise a known ground of bias during the arbitration can constitute a waiver, barring a later set-aside application.

Enforcement under the New York Convention. Hong Kong is a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Under Article V(1)(d), enforcement may be refused if the composition of the arbitral authority was not in accordance with the parties’ agreement. A biased tribunal that was not properly challenged during the proceedings may still be challenged at the enforcement stage in a foreign court. However, the enforcing court may apply a stricter standard if the party had the opportunity to challenge but did not.

Costs consequences. A party that unsuccessfully challenges an arbitrator may be ordered to bear the costs of the challenge, including the arbitrator’s fees for the time spent responding. The HKIAC Rules provide that the institution may allocate costs for the challenge procedure. An ill-founded challenge can also damage the party’s credibility with the tribunal for the remainder of the proceedings.

Practical Takeaways

• Act within 15 days of discovering a ground for challenge; any delay risks waiving the right to object under Section 25(3) of Cap. 609.
• Gather documentary evidence before submitting a challenge; the test is objective, and the institution or court will assess facts, not assertions.
• For institutional arbitrations, file the challenge with the institution, not the court; direct court applications are only for ad hoc arbitrations.
• A failed challenge during the arbitration does not automatically bar a later set-aside application, but the court will consider whether the party acted promptly and in good faith.
• Review the IBA Guidelines on Conflicts of Interest before appointing an arbitrator; proactive disclosure avoids later disputes.

This does not constitute legal advice. Consult a solicitor for your specific case.